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ASTE Q3 Earnings Miss Estimates on Weak Margins and Higher Costs
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Key Takeaways
Astec reports break-even Q3 earnings while sales rose 0.7% to $352.4 million.
Inflation, unfavorable sales mix and higher costs push Astec's adjusted EBITDA down 30.3% to $18.9 million.
ASTE cuts its 2026 adjusted EBITDA outlook to $140-$150 million, despite a 49.2% surge in backlog to $670.5M.
Astec Industries Inc. (ASTE - Free Report) reported break-even earnings per share for the third quarter of 2026 against earnings of 47 cents in the year-ago quarter. The figure missed the Zacks Consensus Estimate of earnings of 50 cents per share. Inflationary pressures and unfavorable sales mix weighed on profitability.
Including one-time items, the company reported a loss of 53 cents per share compared with a loss of 18 cents in the year-ago quarter.
Net sales increased 0.7% year over year to $352.4 million but missed the Zacks Consensus Estimate of $377 million. The increase reflected growth in Materials Solutions, partially offset by lower Infrastructure Solutions sales.
Astec's backlog surged 49.2% year over year to $670.5 million, indicating healthy underlying equipment demand.
Astec Industries, Inc. Price, Consensus and EPS Surprise
Cost of sales increased 1.6% year over year to $270.1 million. Gross profit declined 2.3% to $82.3 million, while gross margin contracted to 23.4% from 24.1%. Unfavorable sales mix, lower manufacturing absorption and inflationary pressures on materials, labor and overhead affected profitability.
Selling, general and administrative expenses increased 1.1% to $84.2 million. The company reported an operating loss of $3.3 million against an operating income of $1.1 million in the prior-year quarter.
Adjusted operating income declined 41.3% year over year to $12.1 million. Adjusted operating margin contracted 250 basis points to 3.4%. Adjusted EBITDA fell 30.3% to $18.9 million, while the corresponding margin decreased 230 basis points to 5.4%.
Infrastructure Solutions net sales declined 2.2% year over year to $189 million. The decrease primarily reflected unfavorable volume and mix, partially offset by favorable pricing. Management attributed the softness to macroeconomic uncertainty that caused certain asphalt plant customers to postpone orders earlier in the year.
Segment operating adjusted EBITDA dropped 36% to $15.3 million. The corresponding margin contracted 430 basis points to 8.1%, primarily due to inflation in materials, labor and overhead.
However, implied orders increased 38% sequentially to $281.9 million, resulting in a book-to-bill ratio of 149%. The segment's backlog rose 47% year over year to $381.5 million, reflecting improving demand despite shipment timing challenges.
ASTE's Materials Solutions Sales Rise Y/Y
Materials Solutions generated net sales of $163.4 million, up 4.1% year over year. Growth was driven by favorable pricing and volume and mix. Demand for aggregate crushing and screening equipment, along with aftermarket parts and services, remained steady.
Segment operating adjusted EBITDA declined 9.7% to $13.9 million, while the margin contracted 130 basis points to 8.5%. Inflationary pressures and increased selling, general and administrative expenses weighed on results.
Implied orders decreased 45.3% sequentially to $139.9 million, with a book-to-bill ratio of 86%. Nevertheless, the segment's backlog increased 52.1% year over year to $289 million.
Astec's Aftermarket Business Remains Resilient
Parts and service sales increased 0.3% year over year to $125.8 million. These revenues accounted for 35.7% of third-quarter net sales and 35.2% of sales during the first nine months of 2026.
Management highlighted continued aftermarket demand alongside equipment opportunities supported by infrastructure investment. Construction of data centers and other industrial projects is expected to underpin multiyear demand for aggregate processing equipment.
ASTE's Cash Flow and Liquidity Improve
For the first nine months of 2026, operating cash flow increased to $70.2 million from $25.3 million in the prior-year period. Free cash flow rose to $48 million from $13.3 million, reflecting improved cash generation.
Capital expenditures increased to $22.2 million from $12 million during the same period. Astec ended September with total liquidity of $267.2 million, comprising $63.2 million in available cash and cash equivalents and $204 million in revolving credit availability.
Net debt to trailing 12-month adjusted EBITDA stood at approximately 2.3x, within management's target range of 1.5-2.5x.
Astec Cuts 2026 Adjusted EBITDA Guidance
Astec lowered its full-year 2026 adjusted EBITDA guidance to $140-$150 million from the previous projection of $160-$175 million.
Management cited macroeconomic uncertainty, inflationary pressures and delays in asphalt plant orders as key challenges. Certain shipments have shifted to the fourth quarter of 2026 and the first quarter of 2027.
Despite these headwinds, the company described underlying infrastructure equipment demand as resilient. Management expects public infrastructure funding, data-center construction and continued demand for aggregate equipment to support longer-term growth opportunities.
Astec Stock’s Price Performance & Zacks Rank
Over the past year, Astec stock declined 21.4% compared with the industry’s 1.9% dip.
How did Astec’s Industry Peers Perform in the Quarter?
Caterpillar Inc. (CAT - Free Report) reported adjusted earnings of $7.20 per share for the third quarter of 2026, up 45.5% year over year. The figure surpassed the Zacks Consensus Estimate of $7.12 by 1.12%.
Sales and revenues increased 17.3% to $20.68 billion, surpassing the consensus estimate of $20.58 billion. Caterpillar's order backlog surged 95.7% year over year to a record $78.1 billion, reflecting strong order rates.
Komatsu (KMTUY - Free Report) reported an 8% year-over-year improvement in earnings per share to 68 cents in the September-ended quarter. The figure also surpassed the Zacks Consensus Estimate of 64 cents by 6.25%. Revenues were reported at $7 billion compared with $6.66 billion in the year-ago quarter.
Terex Corporation (TEX - Free Report) reported adjusted earnings of $1.50 per share, beating the Zacks Consensus Estimate of $1.42 by 5.6%. Earnings were flat year over year.
Revenues surged 58.4% year over year to $2.20 billion, surpassing the consensus estimate of $2.17 billion by 1.4%. Pro forma revenues grew 11.6%, driven by higher shipments across Materials Processing, Specialty Vehicles and Aerials.
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ASTE Q3 Earnings Miss Estimates on Weak Margins and Higher Costs
Key Takeaways
Astec Industries Inc. (ASTE - Free Report) reported break-even earnings per share for the third quarter of 2026 against earnings of 47 cents in the year-ago quarter. The figure missed the Zacks Consensus Estimate of earnings of 50 cents per share. Inflationary pressures and unfavorable sales mix weighed on profitability.
Including one-time items, the company reported a loss of 53 cents per share compared with a loss of 18 cents in the year-ago quarter.
Net sales increased 0.7% year over year to $352.4 million but missed the Zacks Consensus Estimate of $377 million. The increase reflected growth in Materials Solutions, partially offset by lower Infrastructure Solutions sales.
Astec's backlog surged 49.2% year over year to $670.5 million, indicating healthy underlying equipment demand.
Astec Industries, Inc. Price, Consensus and EPS Surprise
Astec Industries, Inc. price-consensus-eps-surprise-chart | Astec Industries, Inc. Quote
ASTE's Operating Loss Widens on Cost Pressures
Cost of sales increased 1.6% year over year to $270.1 million. Gross profit declined 2.3% to $82.3 million, while gross margin contracted to 23.4% from 24.1%. Unfavorable sales mix, lower manufacturing absorption and inflationary pressures on materials, labor and overhead affected profitability.
Selling, general and administrative expenses increased 1.1% to $84.2 million. The company reported an operating loss of $3.3 million against an operating income of $1.1 million in the prior-year quarter.
Adjusted operating income declined 41.3% year over year to $12.1 million. Adjusted operating margin contracted 250 basis points to 3.4%. Adjusted EBITDA fell 30.3% to $18.9 million, while the corresponding margin decreased 230 basis points to 5.4%.
Astec's Infrastructure Solutions Faces Margin Pressure
Infrastructure Solutions net sales declined 2.2% year over year to $189 million. The decrease primarily reflected unfavorable volume and mix, partially offset by favorable pricing. Management attributed the softness to macroeconomic uncertainty that caused certain asphalt plant customers to postpone orders earlier in the year.
Segment operating adjusted EBITDA dropped 36% to $15.3 million. The corresponding margin contracted 430 basis points to 8.1%, primarily due to inflation in materials, labor and overhead.
However, implied orders increased 38% sequentially to $281.9 million, resulting in a book-to-bill ratio of 149%. The segment's backlog rose 47% year over year to $381.5 million, reflecting improving demand despite shipment timing challenges.
ASTE's Materials Solutions Sales Rise Y/Y
Materials Solutions generated net sales of $163.4 million, up 4.1% year over year. Growth was driven by favorable pricing and volume and mix. Demand for aggregate crushing and screening equipment, along with aftermarket parts and services, remained steady.
Segment operating adjusted EBITDA declined 9.7% to $13.9 million, while the margin contracted 130 basis points to 8.5%. Inflationary pressures and increased selling, general and administrative expenses weighed on results.
Implied orders decreased 45.3% sequentially to $139.9 million, with a book-to-bill ratio of 86%. Nevertheless, the segment's backlog increased 52.1% year over year to $289 million.
Astec's Aftermarket Business Remains Resilient
Parts and service sales increased 0.3% year over year to $125.8 million. These revenues accounted for 35.7% of third-quarter net sales and 35.2% of sales during the first nine months of 2026.
Management highlighted continued aftermarket demand alongside equipment opportunities supported by infrastructure investment. Construction of data centers and other industrial projects is expected to underpin multiyear demand for aggregate processing equipment.
ASTE's Cash Flow and Liquidity Improve
For the first nine months of 2026, operating cash flow increased to $70.2 million from $25.3 million in the prior-year period. Free cash flow rose to $48 million from $13.3 million, reflecting improved cash generation.
Capital expenditures increased to $22.2 million from $12 million during the same period. Astec ended September with total liquidity of $267.2 million, comprising $63.2 million in available cash and cash equivalents and $204 million in revolving credit availability.
Net debt to trailing 12-month adjusted EBITDA stood at approximately 2.3x, within management's target range of 1.5-2.5x.
Astec Cuts 2026 Adjusted EBITDA Guidance
Astec lowered its full-year 2026 adjusted EBITDA guidance to $140-$150 million from the previous projection of $160-$175 million.
Management cited macroeconomic uncertainty, inflationary pressures and delays in asphalt plant orders as key challenges. Certain shipments have shifted to the fourth quarter of 2026 and the first quarter of 2027.
Despite these headwinds, the company described underlying infrastructure equipment demand as resilient. Management expects public infrastructure funding, data-center construction and continued demand for aggregate equipment to support longer-term growth opportunities.
Astec Stock’s Price Performance & Zacks Rank
Over the past year, Astec stock declined 21.4% compared with the industry’s 1.9% dip.
Image Source: Zacks Investment Research
Astec carries a Zacks Rank #4 (Sell) at present.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
How did Astec’s Industry Peers Perform in the Quarter?
Caterpillar Inc. (CAT - Free Report) reported adjusted earnings of $7.20 per share for the third quarter of 2026, up 45.5% year over year. The figure surpassed the Zacks Consensus Estimate of $7.12 by 1.12%.
Sales and revenues increased 17.3% to $20.68 billion, surpassing the consensus estimate of $20.58 billion. Caterpillar's order backlog surged 95.7% year over year to a record $78.1 billion, reflecting strong order rates.
Komatsu (KMTUY - Free Report) reported an 8% year-over-year improvement in earnings per share to 68 cents in the September-ended quarter. The figure also surpassed the Zacks Consensus Estimate of 64 cents by 6.25%. Revenues were reported at $7 billion compared with $6.66 billion in the year-ago quarter.
Terex Corporation (TEX - Free Report) reported adjusted earnings of $1.50 per share, beating the Zacks Consensus Estimate of $1.42 by 5.6%. Earnings were flat year over year.
Revenues surged 58.4% year over year to $2.20 billion, surpassing the consensus estimate of $2.17 billion by 1.4%. Pro forma revenues grew 11.6%, driven by higher shipments across Materials Processing, Specialty Vehicles and Aerials.